Global economy slowed at end of strong third quarter

Surveys of purchasing managers around the world showed that the global economy grew in September, albeit at a slower rate than in August.

A report published by Markit Economics last week showed that the JPMorgan global all-industry output index fell to 53.5 last month from 55.1 in the previous month. Despite the fall in the index, the reading still signalled expansion in the global economy for the fiftieth consecutive month.

JPMorgan Global All-Industry Indices
	Aug	Sep
Output	55.1	53.5
New orders	54.8	54.5
Input prices	54.0	55.6
Employment	52.2	51.0

According to Markit, the slower rate of growth in the global economy in September was the result of sharply lower growth in the United States. Markit's US manufacturing PMI fell to 52.8 in September from 53.1 in August. While the Institute for Supply Management's US manufacturing PMI rose to 56.2 in September from 55.7 in August, its non-manufacturing index fell to 54.4 from 58.6.

However, it was a different story for most of the other major economies.

In the euro area, the economy continued to show improvement with Markit's composite output index for the region rising to 52.2 in September, a 27-month high, from 51.5 in August. The manufacturing PMI fell to 51.1 from 51.4 but the services business activity index rose to 52.2 from 50.7.

China's economy also continued to gain momentum. The manufacturing PMI from the National Bureau of Statistics and the China Federation of Logistics and Purchasing rose to 51.1 in September from 51.0 in August while HSBC's manufacturing PMI rose to 50.2 from 50.1.

In China's services sector, the non-manufacturing PMI from the National Bureau of Statistics and China Federation of Logistics and Purchasing rose to 55.4 in September, the highest in six months, from 53.9 in August.

It was a similar story in Japan, where Markit's composite output index rose to 53.2 in September from 51.9 in August. The Markit/JMMA manufacturing PMI rose to 52.5 in September, the highest since February 2011, from 52.2 in August. The services business activity index rose to 53.0 from 51.2, marking its eleventh consecutive month of expansion, the longest on record.

Commenting on the result of the purchasing managers surveys, JPMorgan economist Joe Lupton said that, despite the dip in September, the data for the third quarter as a whole point to the “strongest pace of growth of global GDP in almost one-and-a-half years”.